Cancelling car insurance when premiums rise: is it possible?
If your premiums rise, you can cancel your car insurance. Other reasons to terminate a policy early also exist. Comparis explains what you need to know.
01.04.2025
iStock / Jinda Noipho
1. Terminating car insurance early following a premium increase
If your car insurance premium rises, you usually have the right to cancel your insurance policy. In other words, you can terminate your current contract early. However, this must be the result of a unilateral premium adjustment by the insurance company. This includes a general increase in rates.
Has the insurer raised your premiums based on your behaviour or risk? In that case, you don’t have the right to terminate your contract early. This may apply, for example, if you change your cover or your premiums are recalculated after an accident.
Good to know: some insurance companies don’t allow you to cancel all cover after a premium increase. Depending on the contract, you may only be able to terminate the affected part of the policy early. Some insurance companies also exclude the option to terminate in the event of a premium reduction.
Before cancelling: compare premiums
Without third-party liability insurance, you are not allowed to drive your car in Switzerland. Make sure that you’re not uninsured after terminating the policy. It’s best to compare the premiums of different providers. That way, you can find the right car insurance for you.
2. Why do car insurance companies increase premiums?
Insurance companies operate according to the principle of solidarity. This means that policyholders do not just pay the premiums for themselves, but for everyone. In the event of a claim, the insurance company will then use the money paid in by everyone to cover the claim. General inflation therefore also affects policyholders who have not made any claims.
Car insurance companies give several reasons for increasing premiums:
The amount of the car insurance premium depends, among other things, on your personal risk. This is influenced by the following factors:
Vehicle
Vehicle keeper
Previous claims and accidents
Use
Insurance cover
If your profile changes, the insurance company may adjust the premiums. In this case, you can’t terminate the policy early. You can switch car insurance from the next ordinary termination date.
The prices of many spare parts have increased in recent years. This is partly due to the following:
The technology installed in cars
Material costs
Wages
Inflation
This is reflected in the repair costs – and ultimately in the premiums.
Extreme weather events are more likely to cause damage. Heavy rain, for example, leads to flooding and landslides. However, even minor events such as flooded garages can lead to damage and resulting claims.
3. Terminating car insurance early for other reasons
In addition to premium increases, you can also terminate your car insurance policy early for other reasons:
After a claim, either party may terminate the contract if the insurance company has provided a benefit. If you would like to cancel, you usually have 14 days from the date you find out the outcome of the claim (Art. 42 para. 1 IPA). In practice, this is typically when you receive money in your account or a letter from the insurance company.
If the insurance company wishes to cancel your policy, it must do so at the latest when it pays out the benefit. After receiving notice of termination, you still have 14 days until the contract ends (Art. 42 para. 2 IPA). Any annual premium already paid will be refunded on a pro rata basis.
Important: If you cancel in the first year of insurance, the insurance company may claim the entire premium for the year (Art. 42 para. 3 IPA).
Will the owner of the vehicle change, for example, as the result of a sale? The rights and obligations from liability insurance are then transferred to the new person – regardless of whether the insurance policy is continued or not. Casco insurance expires.
The new person can accept or reject the previous insurance cover. The insurance company can also decide whether or not to continue the contract with the new person.
You can also change your insurance when changing vehicles. Report the sale and change of vehicle to your current insurance company immediately. The insurer needs to cancel the contract. Any annual premium already paid will then be refunded on a pro rata basis.
If you are deregistering your car, you can also cancel the contract with the insurance company. One reason for deregistration, for example, is moving abroad. However, if you only deposit the number plates with the road traffic office, your car insurance will only be paused.
Has the insurer announced new, less favourable contractual conditions? You can then terminate the policy extraordinarily, depending on the contract. This may also apply if the insurance company increases the deductible (unless you have requested this change).
The insurance company must inform you in writing of the content of the policy before concluding the contract (Art. 3 IPA). If they don’t, you can cancel the contract within four weeks (Art. 3a IPA). However, this right only exists for the first two years of the contract.
4. How do I give notice of extraordinary termination for my car insurance?
You must cancel your car insurance in writing within the notice period. In the case of extraordinary termination, the deadlines are usually shorter than for ordinary termination. Check your insurance policy for more information.
If your premium is increasing, the insurance company must receive the notice of termination by the last day of the insurance period at the latest. The postmark does not count.
Cancellation template for extraordinary termination of car insurance
Here’s a template for a cancellation letter you can send to your car insurer. Fill out the form, sign it and send it to the insurance company in good time. We recommend sending a letter by registered mail.
This article was first published on 01.04.2025
